Updated: Nov 5

Our co-founder Lindsay Fisher recently shared her thoughts on the future of retail and how technology will transform the high street with eTail Europe. Read on to find out why, when it comes to retail transformation, the team at Sparkbox is more excited about technologies in the “dataverse” than the metaverse.


 

The pandemic fundamentally changed how we think about and prioritise things in all aspects of our lives, including how we shop. During the pandemic, we watched as outdated high street giants like Topshop fell to online monoliths (ASOS purchased Topshop and Miss Selfridge in a £330m deal back in Feb 2021) after 2020’s lockdowns shifted demand online.


Even before the pandemic, the growth of online channels had a major effect on the high street. To lure customers back to physical spaces, some retailers doubled down on ‘experiential’ retail: Selfridges, for example, gave over major Oxford Street store space to a cinema in November 2019.



The Cinema at Selfridges.

Image source: https://uk.fashionnetwork.com/news/Selfridges-oxford-street-opens-permanent-cinema,1160885.html


Post-covid, the ‘experiential’ retail shift is happening online too: brands like Nike and Forever21 are building empires in the metaverse , while others are looking at cross-platform experiences that link influencers with in-store experiences and actual purchasing behaviour. Cross-platform synchronicity is already common in other countries, like in China where ‘Lipstick King’ Li Jiaqi, for example, has acquired more than 170 million followers across various live streaming platforms and once sold more than 15,000 lipsticks in just five minutes.


Pandemic aside, new technologies are enabling new business models and it’s interesting to examine which will last: exciting concepts in the metaverse, web3, and NFTs might still be fantastical for retailers in the UK, many of whom still struggle with warehousing even basic trading data.


Meanwhile, Buy Now Pay Later technology once paved a path to customer acquisition and increased average order value but has recently come under scrutiny and the threat of regulation. Rental schemes and circular models (consumer to consumer resale) provide hope for a more sustainable future of fashion but, including the impact of shipping and dry cleaning, it’s unclear that these models are truly sustainable. Businesses like The Handbag Clinic that focus on restoring our favourite items might strike the right balance in the re-wear revolution.



Ben and Charlotte Staerck, co-founders of the Handbag Clinic.

Image source: https://www.thetimes.co.uk/article/handbag-clinic-saviours-of-the-old-bags-9p2sjxkrn


By contrast Marketplace models are a high priority for many of Sparkbox’s clients, and an area we see growing quickly in the coming years. Third party partnerships between brands and platforms like Next, ASOS and The Very Group enable customers to discover and experience brands in their channel of choice. They also provide retailers with practical new opportunities to optimise assortments, reach new customers and clear stock more profitably.


Another factor influencing the technologies shaping our high street is consumer trust. ‘Generation TikTok’ has an increasing expectation of brand authenticity. To capture real value, online marketing must be backed by truthful claims and quality products. This push has even reached legislative levels, with the UK government currently looking at cracking down on fake reviews. Businesses who incentivise positive reviews could soon be fined up to 10% of their global turnover.


Brands that get authenticity right are able to build not only huge followings, but "fans" rather than "customers." This in turn cultivates brand loyalty, and big business. Companies like sustainable dungarees brand Lucy and Yak have grown quickly through building supportive online communities; meanwhile celebrity founded brands like Rihanna’s “Savage x Fenty” line or Kim Kardashian’s "Skims" regularly use TikTok or Instagram ‘reviews’ to boost new launches.


At Sparkbox we believe the technologies with the most potential to transform the high street are those in the “dataverse”, not the metaverse. Following a period of unpredictable trading during the pandemic, retailers and brands are prioritising cleaning up their data stacks to enable better use of data.


Decision intelligence for merchandising and supply chain processes is transforming the high street by helping retailers leverage their data to buy the right stock and make it available in right place, and at the right price.


Developments in integrating machine learning- based tech has made decision intelligence technology surprisingly quick and practical to implement, which means these projects can be quick wins and benefits-led. One of Sparkbox’s clients implemented our pricing optimisation solution to improve margin by 34% in just 34 days. Two years on, they continue to deploy Sparkbox’s demand forecasts in new and exciting ways across their business.


From the "dataverse" to the metaverse, many exciting technologies will transform the way we shop on the high street (and online) in the next 10 years. At Sparkbox we believe the most exciting changes might come from the most practical solutions; those that help increasingly busy merchandising and operations teams make data-driven decisions easily.



About Us


At Sparkbox we help busy merchandising teams make data-driven decisions quickly and confidently. We use machine learning to forecast demand, optimise pricing and channel allocations and recommend rebuy opportunities. Learn more about us here or get in touch!



We'll use Praetura Ventures' investment to double our team, onboard new customers, and launch new AI-based tools for merchandisers



3 March 2022


Following a period of exciting growth, Sparkbox is thrilled to announce Praetura Ventures has invested £1.5m to help us expand our team, onboard new customers, and launch new products.


Retailers that are powered by data deliver more profits, waste less inventory, and delight more customers - but merchandising functions lag behind when it comes to adoption of data analytics tools. Praetura Ventures has joined our mission to eliminate guesswork and empower humans with the data they need to make better pricing and inventory decisions.


With this investment we welcome two new board members - Colin Greene, a Praetura Operational Partner and former director of US Consumer Retail at Apple, and Louise Chapman who will join as Investor Director.


Colin Greene commented: “Sparkbox’s approach to inventory optimisation has the power to bring about massive changes in fashion and home retail, which is clearly behind the times when it comes to technology adoption within merchandising. I’m looking forward to working with the team and sharing some of the lessons I’ve learnt from my time at Apple and the other tech businesses I’ve been lucky to work closely with over the years. The wider Praetura team are excited to be backing another fantastic Northern tech business and providing more than money support to make Sparkbox a go-to solution for even more household brands.”


As we celebrate this milestone, Sparkbox Co-founders would like to thank our extended team for their hard work during the pandemic and our fantastic customers - many of whom initially invested in our technology and our vision for the future of merchandising at a time of great uncertainty.


Huge thanks to the team at Praetura Ventures, especially Louise Chapman and Peter Carway, and to Adam Kaucher at Irwin Mitchell in Manchester for advising on the deal.


We are hiring! Visit our open roles at careers.sparkbox.ai or share your CV with careers@sparkbox.ai.


For more information please reach us at info@sparkbox.ai.

  • Sparkbox

Updated: Nov 5

Data from Europe can help retailers prepare to reopen non-essential shops in the UK.

 

As UK retailers prepare to reopen non-essential shops from 15 June, the industry is eagerly awaiting a first glimpse of the “new normal” for British retail. How will customers return, and what will they be looking for? How will spending habits change, and will those changes last?

This week we’re looking at trading data from Europe, where shops have reopened after lockdown periods, for insights that can help retailers prepare for what’s to come in the UK. For fashion and seasonal businesses, the road to recovery will no doubt be difficult, but we’re cautiously optimistic about the early bounce back our customers have seen.


Key insights:

1. Trade is resuming quickly, and in many cases exceeding expectations

2. Demand is coming from online growth and new parts of the store estate

3. Customers are excited about discounts and sales can boost average order value

4. Customers are still shopping full price - and when they are, they’re spending more



1. Trade is resuming quickly, and in many cases exceeding expectations


Lockdowns and restrictions on non-essential shopping from late March wreaked havoc on the clothing industry in the UK. According to the Office for National Statistics, “volume of clothing sales in April 2020 plummeted by 50.2% when compared with March 2020, which had already fallen by 34.9%”.

Germany was similarly affected, recording a drop in sales of clothing and shoes of more than 70% in April. After retailers were permitted to reopen in early May, UK retailer Superdry said “initial trading had exceeded expectations” in Germany and that sales “moved from being about 70% down to around minus 30%”.


One of our fast-fashion customers has seen even better results since reopening more than 50 stores in Germany - sales volume and revenue are down from normal levels by just 10%. In France, both volume and revenue have quickly exceed expected levels. These results are aided by discounting, but customers are still shopping full price, especially where styles are highly seasonally relevant.



2. Demand is coming from online growth and new parts of the store estate

Lockdowns have accelerated online demand, particularly for retailers who were equipped to handle a sudden channel shift. In the UK, John Lewis, saw an 84% uplift in online sales between mid-March and mid-April. Data from fintech startup Joko shows that in France, 18 – 35 year olds increased spend with digital brands like ASOS and BooHoo and decreased spend with Zara and H&M during the first two weeks of lockdown.

In Europe, we’ve seen 20% - 50% growth in online sales during the lockdown period, and in most cases this trend has continued even after stores reopened. The ongoing pandemic has rapidly accelerated online shopping, even in relatively saturated areas like clothing, and it looks like this change is here to stay.

Customers visiting physical retail locations are choosing where to shop carefully. In Germany, we’ve seen some stores exceed sales expectations by more than +50%, and others fall short of plan by up to 80%. Fast-fashion customers have so far preferred to visit less densely occupied areas – shops further out of large city centres and accessible by street entrance. Since shops reopened, the least favoured have been those inside shopping malls or city centres, and those near international borders.

Retailers in the UK are already responding to this trend – John Lewis has reportedly chosen to prioritise opening locations that are accessible by car. When stores do open, merchandising and allocations teams will need to react to new trading patterns and reserve replenishment for stores with the most (maybe new-found) potential.


3. Customers are excited about discounts and sales can boost average order value

Despite some cancelled orders and realigned stock, most UK retailers are reopening with unprecedented levels of inventory – much of it ageing quickly. It’s no surprise then that they have already started discounting, and customers are expecting mega deals in the coming weeks.

Marks & Spencer acted quickly to bring forward their usual summer clearance sale to mid-May. Dubbed the “Rainbow Sale”, they aim to clear £15b worth of stock and benefit NHS charities with “the sale of the century”. The scope of the sale is a clear sign that M&S is using this opportunity to address problems that persisted long before lockdown.


When it comes to discounting, we recommend retailers focus on their own stock, rather than on following the competition. More than ever, stock positions are highly variable and brands that attempt to match marketing messages risk eroding margin on their most profitable lines.

In Europe, fast-fashion customers appear to be excited about sale and willing to spend more than usual when they visit stores. In Italy, we’ve seen transactions down 15% in some cases, but sales volume and revenue near normal levels – a result attributed to early discounting on some products.

Some retailers are trying to hold back - Primark set expectations earlier this week that despite holding nearly 2x their normal levels of inventory, customers shouldn’t expect “special discounting”. It’s a necessary move for the brand, which can’t afford to get involved in a promotionally driven business model, but they face tougher competition in a deeply discounted market.


4. Customers are still shopping full price - and when they are, they’re spending more

Possibly the most encouraging sign we’ve seen from Europe is that fashion shoppers are still willing to pay full price – and when they do, they’re spending more.


We looked at the top 15 full price items sold by a fast-fashion retailer in France last week and found the average ticket price was double the comparable figure from last year. Ten percent of baskets included at least 1 of the top full price items. Despite significantly increased sale activity, customers splurged on highly relevant seasonal products like basic dresses and shorts, fashion shorts, and fashion tops.

Willingness to spend (and even splurge) is an encouraging sign and a huge opportunity for retailers in the UK, but to maximise margins and effectively clear ageing stock, merchandising teams will have to decide where to place their bets and their markdown spend. It’s a difficult task in the best of times, but with the added complexity of staggered store openings and variable demand, it’s guesswork. In times like this, retailers need to make data-driven decisions with the help of technology like Sparkbox.

Sparkbox uses machine learning to improve sell through and profitability by optimising pricing and merchandising decisions. We help merchandising teams leverage their data to identify trading opportunities and proactively mitigate risks at the product level. Sparkbox has been named “a top global retail tech startup” by Retail Week and is nominated for 5 Retail Systems Awards in 2020, including Artificial Intelligence Project of the Year.

In a recent conversation with Stylus about overcoming overstock, Sparkbox Co-founder Lindsay Fisher said: “Fashion retailers have been making decisions based on intuition, but this week’s trade will not be next week’s trade anymore. There is no baseline anymore – technology must underpin every decision.”

For more information or if we can help your team, please reach us at info@sparkbox.ai.